Understanding the Plastic Packaging Tax: What It Means for Businesses and the Environment

As concerns about plastic waste and environmental degradation grow, many governments around the world have introduced legislation to address the problem. One such measure deployed in the UK is the Plastic Packaging Tax. This tax, designed to reduce plastic pollution and promote sustainability, has significant implications for both businesses and consumers. 

The plastic packaging tax is a levy imposed on manufacturers, importers and users of plastic packaging that don’t meet certain sustainability criteria. Introduced in the UK on the 1st of April 2022, the aim of the legislation is driving reduction of the use of new plastic and encouraging the use of recycled plastic in packaging.

Who does it apply to and what are the costs?

Those who manufacture or import plastic packaging that contains less than 30% of recycled plastic will be subject to the plastic packaging tax. Businesses who meet this criteria will need to register with HMRC and keep documentation of their packaging content in the case that evidence is needed. The tax cost is £217.85 per tonne* of non compliant plastic packaging. 

Who is exempt?

  1. Small businesses who manufacturer or import less than ten tonnes of plastic a year do not have to pay this tax on plastic packaging
  2. Certain types of plastic packaging are exempt. Some of these include medical products and transportation packaging  (see who is exempt).

Why the need for legislation? 

1. Tackling Plastic Pollution

Plastic packaging accounts for a significant portion of global plastic waste. According to the World Economic Forum, over 8 million tons of plastic enter the oceans every year, harming marine life and ecosystems. Single-use plastics, particularly packaging, are a major contributor to this problem. By taxing plastic packaging that isn’t recycled, governments are hoping to incentivise businesses to reduce their reliance on virgin plastics and shift toward more sustainable alternatives.

2. Encouraging Recycling and Circular Economy

The Plastic Packaging Tax aligns with the principles of the circular economy, which seeks to keep resources in use for as long as possible. By promoting the use of recycled materials wherever possible and practical to do so the tax levy hopes to encourage businesses to close the loop on plastic packaging, reducing the need for new plastic production. This, in turn, could help lower carbon emissions and decrease the environmental impact of packaging materials.

3. Supporting Environmental Goals

Many countries have already committed to reducing their carbon footprints and achieving net-zero emissions by mid-century, and reducing plastic waste is a critical part of achieving these environmental goals. The Plastic Packaging Tax creates an urgency for organisations to to reconsider their packaging choices and adopt more eco-friendly options to avoid additional costs being levied onto them

Implications for Our Industries 

The introduction of the Plastic Packaging Tax presents significant  challenges and many positive opportunities for our industries. . Understanding how to navigate these changes is essential for maintaining compliance and staying competitive in a rapidly evolving market.

1. Cost Implications

The tax directly impacts businesses that rely heavily on plastic packaging, especially those in the food, beverage, and consumer goods sectors. Companies that continue to use packaging with low recycled content may face increased costs, which need to be absorbed or  passed on to consumers in the form of higher prices. However, businesses that invest in sustainable packaging solutions may be able to avoid the tax altogether. Finding a viable solution that can be food safe, works efficiently and offers the same benefits as plastic for product preservation is challenging but much work is in development and testing with substrate and packaging machinery manufacturers across the globe. 

2. Supply Chain Considerations

The tax also has implications for supply chains. Businesses will need to work closely with their suppliers to source materials that meet the recycled content requirements. This may require investments in new technologies, materials, or partnerships with recycling companies. Additionally, ensuring transparency and accurate reporting across the supply chain will be critical to compliance

3. Brand Reputation

Sustainability is increasingly communicated as important to consumers, and companies that embrace eco-friendly practices can enhance their brand reputation by seeming to be at the forefront of positive change. . Businesses that proactively adopt alternative sustainable packaging solutions may be seen as leaders in environmental responsibility, which can improve customer loyalty and attract environmentally-conscious consumers. Conversely, those that are slow to adapt may face reputational risks.

How Businesses Can Adapt

To successfully navigate the Plastic Packaging Tax, businesses should consider the following steps:

1. Review Packaging Materials

Conduct a thorough review of your current packaging materials to assess their recycled content and determine whether they meet the tax requirements. This may involve collaborating with packaging suppliers to explore alternative materials or redesigning products to minimise plastic use such as removing trays or making packs tighter. Work with your packaging machinery manufacturers to understand what trials and testing they have already undertaken to make the switch over to new substrates as seamless as possible. 

2. Invest in Sustainable Packaging

Sustainable packaging solutions are currently considerably higher in cost than other less sustainable solutions, driven by the low adoption and the high development costs of the new materials.   However, considering investing in sustainable packaging solutions that prioritise recyclability and the use of recycled content. Innovations in biodegradable plastics, compostable materials, and reusable packaging systems can offer long-term benefits by reducing tax liability and aligning with environmental goals. In addition, mass adoption of emerging substrates will lower pricing and increase accessibility to smaller manufacturers.

3. Engage in the Circular Economy

Adopting circular economy principles can help businesses not only comply with the Plastic Packaging Tax but also contribute to broader sustainability objectives. This could include initiatives like implementing closed-loop recycling programs, supporting packaging take-back schemes, or exploring opportunities to reduce, reuse, and recycle materials across the supply chain. As an example, technology and engineering is now available that allows much tighter packaging across flow wrap products, reducing plastic use by up to 35%, creating smaller formats packs, and ultimately reducing transportation and secondary packaging costs too. 

4. Stay Informed

Legislation around plastic packaging and environmental regulations is constantly evolving. Staying informed about policy changes, tax updates, and industry trends is crucial for remaining compliant and competitive. Engaging with industry groups, attending sustainability conferences, and consulting with legal experts can provide valuable insights to understand how existing product packaging could be reduced from the removal of product trays to tighter packs.. Sign up to your suppliers newsletters and content to ensure that they are keeping you fully up to date with any changes, legal or through innovation. 

5. Communicate Your Efforts

Transparency is key. Communicate your efforts to reduce plastic waste and improve packaging sustainability to your customers, stakeholders, and the wider community, on pack, via media and through your websiteHighlighting your commitment to the environment can enhance your brand image and differentiate you from competitors.

The Plastic Packaging Tax is part of a global movement to reduce plastic waste and promote sustainability. While it presents challenges for businesses, it also offers opportunities for innovation and leadership in the transition toward a circular economy. By proactively embracing sustainable packaging solutions, businesses can not only avoid the tax but also contribute to a cleaner, more sustainable future for all.

Whether you’re a business owner, a consumer, or a sustainability advocate, the Plastic Packaging Tax is a key development to watch as we collectively work to address the plastic pollution crisis. At Redpack we are helping to  “Remove – Reduce – Recycle”,  from ensuring our machines can work with alternate substrates, continuing to optimise the tightness of packs to reduce the amount of plastic used and helping to identify ways to remove product trays are just some of the ways we are helping businesses reduce their plastic footprint.

If you’d like help to trial new substrates or explore how you may be able to reduce your existing plastic and packaging use get in touch.

* From 1st April 2024.

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Kristin Watson

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Sally Usher

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Contact Sally on sally.usher@redpackmaschinen.de to arrange any of the following:

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  • Health checks and assessments
  • Arranging maintenance contracts
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